State and Local Taxing Authorities Taking More Than Their Fair Share of the Electronic Information Age


David C. Blum


VOL. XIV • Spring 1996 • NO. 3 (table of contents)

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This comment discusses the trend of state and local departments of revenue taxing users and providers of computer and information services even though the tax is not included in the jurisdiction’s legislation. While services are normally exempt from tax unless specifically enumerated, the Departments of Revenue recharacterize the service of providing electronically transmitted information into a purchase or lease of tangible personal property so the transaction can be taxed. This comment argues that users and providers of electronic information services should not be liable for a sales or use tax in a jurisdiction that lacks clear and specific statutory authority for a Department of Revenue to assess a tax on electronic information. Statutes specifically authorizing a tax are discussed, as well as Department of Revenue actions that have been overturned by the courts and arguments users and providers can use to try to defeat such as assessment.

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